The Finance Act 2025 introduces a 10% excise duty on virtual asset transaction fees, expanded SEP tax, a 5-year loss carry forward limit, AMT, and new APA guidelines.
Kenya’s President William Ruto signed the Finance Act 2025 into law on 26 June 2025.
This follows after Kenya’s National Treasury published the 2025-26 Budget Statement on 12 June 2025, outlining key tax measures aligning with proposals highlighted in the 2025 Finance Bill. Kenya’s Cabinet Secretary for National Treasury and Economic Planning, John Mbadi, presented the Finance Bill 2025 on 30 April 2025.
The key tax measures updates include:
Alternative minimum tax (AMT)
The 1% tax introduced in 2021, previously suspended and ruled unconstitutional, was formally repealed.
Digital asset tax
The proposed 1.5% tax on digital assets was repealed. Instead, a 10% excise duty on fees for virtual asset transactions by providers was introduced.
Advance pricing agreements (APAs)
Residents and non-residents under Kenya’s transfer pricing rules can enter APAs with the Kenya Revenue Authority for up to 5 years.
Significant Economic Presence (SEP) tax
The scope of the SEP tax now includes income from internet or electronic network businesses, not just digital marketplaces. The SEP tax exemption for non-residents with annual turnover under KES 5 million was repealed.
Loss carry forward
Losses can now only be carried forward for 5 years, with possible extensions upon approval.
Non-resident income deduction
The one-third income deduction for non-residents under certain conditions was repealed.
These measures will go into effect from 1 July 2025.
